Mouse satellite cells have been shown to be functional muscle stem cells, in that they are able to regenerate skeletal muscle and to reconstitute the satellite cell pool. Although human muscle precursor cells are able to contribute to skeletal muscle regeneration following transplantation into host mouse muscles, it is uncertain whether they also give rise to functional satellite cells. Here, we transplant human fetal muscle precursor cells into cryodamaged muscles in C(5)-/gamma-chain-/Rag2-host mice. The donor cells gave rise to muscle fibres that persisted for up to 6 months after grafting. Isolated muscle fibres, bearing satellite cells, were prepared from muscles 4 weeks after grafting. When placed in culture, a small proportion of these fibres gave rise to muscle precursor cells of human origin, indicating that the originally grafted cells had formed satellite cells as well as regenerated muscle fibres. These satellite cell-derived human muscle precursor cells were expanded in culture and formed muscle following their transplantation into a second series of host mice. This provides evidence that human, as well as mouse, muscle precursor cells, are capable of forming functional satellite cells in vivo.